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Transcript of Copyright © 2002 All rights reserved. 1 CHAPTER 8 Individual Customer Decision Making.
1
Copyright © 2002
All rights reserved.
CHAPTER 8CHAPTER 8
Individual Customer
Decision Making
Individual Customer
Decision Making
CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVECUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE
PART 3: Customer Decisions and RelationshipsPART 3: Customer Decisions and Relationships
CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVECUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE
PART 3: Customer Decisions and RelationshipsPART 3: Customer Decisions and Relationships
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
2 Copyright © 2002
All rights reserved.
Customer Behavior: A Managerial Perspective
Conceptual FrameworkConceptual Framework
Payer
UserBuyerUNDERSTANDING
CUSTOMER BEHAVIOR
UNDERSTANDING CUSTOMER BEHAVIOR
Individual Decision Making ProcessIndividual Decision Making Process
ProblemRecognition
Information Search
Alternative Evaluation
PurchasePost-Purchase
Experience
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
3 Copyright © 2002
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Customer Behavior: A Managerial Perspective
Location and Cost of an Individual DecisionLocation and Cost of an Individual Decision
Individual consumption can occur in three places: Home Business organizations Public places
The values of the three customer roles interplay, and trade-offs become integral to the decision process
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
4 Copyright © 2002
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Customer Behavior: A Managerial Perspective
Customer DecisionsCustomer Decisions
Decisions customers make in the marketplace as buyers, payers, and users, include: Whether to purchase What to purchase When to purchase From whom to purchase How to pay for it
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
5 Copyright © 2002
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Customer Behavior: A Managerial Perspective
Mental BudgetingMental Budgeting
Customers mentally set aside budgets for product categories
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
6 Copyright © 2002
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Customer Behavior: A Managerial Perspective
Customer Decision ProcessCustomer Decision Process
PurchasesPurchasesPost-purchase Experience
Post-purchase Experience
Alternative EvaluationAlternative Evaluation
Information Search
Information Search
Problem Recognition
Problem Recognition
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
7 Copyright © 2002
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Customer Behavior: A Managerial Perspective
Step 1: Problem RecognitionStep 1: Problem Recognition
A customer problem is any state of deprivation, discomfort, or wanting
Problem recognition is a realization by the customer that he or she needs to buy something to get back to the normal state of comfort physically and psychologically
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Stimuli for Problem Recognition Stimuli for Problem Recognition
Internal stimuli / Problem stimuli Perceived states of physical or psychological
discomfort that causes problem recognition
External stimuli / Solution stimuli Marketplace information that causes problem
recognition
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Four Situations for Problem RecognitionFour Situations for Problem Recognition
VIVID LATENT
FAMILIARStock
DepletionEducational Marketing
NOVELLife Stage
ChangeNew Product Technology
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
10 Copyright © 2002
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Customer Behavior: A Managerial Perspective
Step 2: Information SearchStep 2: Information Search
Three elements of the information-search phase are: Sources of information Search strategies Amount of search
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
11 Copyright © 2002
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Customer Behavior: A Managerial Perspective
Awareness, Evoked, and Consideration SetsAwareness, Evoked, and Consideration Sets
Awareness Set (All the brands in the
Awareness)
Brands NOT recalled
Brands NOT considered
Consideration Set(Brands considered)
Evoked Set(Brands recalled)
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
12 Copyright © 2002
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Customer Behavior: A Managerial Perspective
Sources of Information for CustomersSources of Information for Customers
• Advertising• Salespersons• Product/service brochures• Store displays• Company web sites
PERSONAL• Friends and other acquaintances• Past experience
INDEPENDENT SOURCES• Public information (e.g., Consumer
Reports, Better Business Bureau, news reports in media, government publications, such as The Census of Manufacturers)
• Product or service experts: (e.g., auto critic, home appraiser, pharmacist, and so on)
• Internet (bulletin boards)
MARKETER SOURCES NONMARKETER SOURCES
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Low Cost of Information SearchLow Cost of Information Search
The Internet Democratization of information
The growth of Interactive Home Shopping (IHS) is dependent on: Selection Screening Reliability Product comparison
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Search StrategySearch Strategy
The pattern of information acquisition customers utilize to solve their decision problems Customer decision strategies
Routine problem solving Extended problem solving Limited problem solving
Systematic vs. heuristic search strategies
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Systematic versus Heuristic SearchSystematic versus Heuristic Search
Systematic search consists of a comprehensive search and evaluation of alternatives
Heuristics are quick rules of thumb and shortcuts used to make decisions
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Strategies Used for Handling Missing InformationStrategies Used for Handling Missing Information
Interattribute inference
Evaluative consistency
Other-brand averaging
Negative cue
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Determinants of the Amount of SearchDeterminants of the Amount of Search
Perceived riskInvolvementFamiliarityExpertiseTime pressureFunctional versus expressive nature of the product or serviceInformation overloadRelative brand uncertainty
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Perceived RiskPerceived Risk
Performance risk
Social risk
Psychological risk
Financial risk
Obsolescence risk
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
InvolvementInvolvement
Purchase-decision involvement is the degree of concern and caring that customers bring to bear on the purchase decision
Enduring involvement is on-going interest in the product or service
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Illustrative Measures of Consumer InvolvementIllustrative Measures of Consumer Involvement
This product isUnimportant _______________ ImportantMeans a lot to me _______________ Means nothing to me*Unappealing _______________ AppealingValuable _______________ Worthless*Unexciting _______________ Exciting
PRODUCT INVOLVEMENT OR IMPORTANCE:
• Cars offer me relaxation and fun when life’s pressures build up.• I prefer to drive a car with a strong personality of its own.• To me, a car is nothing more than an appliance.*• I enjoy conversations about cars.
ENDURING PRODUCT INVOLVEMENT: (Example: consumer involvement with cars)
• In choosing this product, I would not care at all/would care a lot about which brand, make, or model I buy.
• How important would it be for you to make a right choice of this product? Not at all/Extremely Important• It is not/it is a big deal if I make a mistake in choosing _____(the product name).*
PURCHASE INVOLVEMENT:
*Reverse scored.
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Familiarity and ExpertiseFamiliarity and Expertise
A Classification of Shopping Types on the Internet
Harris Interactive Shopping Type
Description% of Total
Online Shoppers
1. eBivalent Newbies Newest to the Internet; does not spend a lot online and likes online shopping the least
5%
2. Hooked, Online and Single
Likely to be young males; has been online the longest; banks, invest, and ships online the most often
16%
3. Time-Sensitive Materialists
Most interested in convenience and saving time; wants fast check-out and one-stop shopping
17%
4. Brand Loyalists Go directly to the site of the merchant they know; spend the most online
19%
5. Hunter-Gatherers Ages 30-49 with two children; utilize sites that compare and provide analysis
20%
6. Clicks and Mortar Group
Shops online but prefers to buy offline; concerned with online privacy and security; visits shopping malls the most
23%
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Time PressureTime Pressure
Time is scarce due to: Both spouses working Many customers employed in more than one
job Many customers re-enrolling in school New leisure activities enabled by technology
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Brand UncertaintyBrand Uncertainty
Relative brand uncertainty is the uncertainty about which brand is best among a set of brands
Individual brand uncertainty is the uncertainty about what each brand offers
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Functional Versus Expressive Nature of Products And ServicesFunctional Versus Expressive Nature of Products And Services
Information Processing Mode (IPM) Some people buy primarily for their physical
performance
Affective Choice Mode (ACM) Some people buy primarily or significantly for
their social image or for their sensory enjoyment
Copyright © 1999 by Thomas Southwestern. All rights reserved.
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Customer Behavior: A Managerial Perspective
Information OverloadInformation Overload
Customers are exposed to so much information that they are unable to process it to make a decision
Copyright © 1999 by Thomas Southwestern. All rights reserved.
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Customer Behavior: A Managerial Perspective
Step 3: Alternative EvaluationStep 3: Alternative Evaluation
Choice Models Compensatory Noncompensatory
Copyright © 1999 by Thomas Southwestern. All rights reserved.
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Customer Behavior: A Managerial Perspective
Use of the Compensatory Choice Model by a Business CustomerUse of the Compensatory Choice Model by a Business Customer
Poor (1)4 Average (2) Excellent (4)
VENDOR 3WEIGHT VENDOR 1 VENDOR 2
Excellent (4)1 Poor (1) Good (3)
Good (3)3 Good (3) Poor (1)
4(1) + 3(3) + 1(4) + 2(1) = 19
4(2) + 3(3) + 1(1) + 2(3) = 24
4(4) + 3(1) + 1(3) + 2(2) = 26
Poor (1)2 Good (3) Average (2)
Quality
ATTRIBUTE
Customer support
Fit with desired performance standards
Total
Price
VENDOR RATINGS
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Noncompensatory ModelsNoncompensatory Models
Conjunctive model The minimum cutoffs on all salient attributes are set
Disjunctive model Entails trade-offs between aspects of choice alternatives
Lexicographic model Attributes of alternatives are rank-ordered in terms of importance
Elimination by aspects model Attributes of alternatives are rank-ordered in terms of
importance, and cutoff values are defined
Copyright © 1999 by Thomas Southwestern. All rights reserved.
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Customer Behavior: A Managerial Perspective
How and When Models Are UsedHow and When Models Are Used
Concepts Processing by brand/supplier or by attribute Comparative features of various choice
models The two-stage choice process Rapid heuristics Satisficing
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Step 4: PurchaseStep 4: Purchase
Choice Identification
Purchase Intent
Purchase Implementation
Copyright © 1999 by Thomas Southwestern. All rights reserved.
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Customer Behavior: A Managerial Perspective
Delay in ImplementationDelay in Implementation
REASONS FOR DELAY
CUSTOMER ROLEREASON
MEAN IMPORTANCE
UserNeeded more information 3.43
User, payer, buyerTime Pressure--To busy to devote the time 3.91
UserNot sure if needed the item 2.75
PayerCouldn’t afford at the time 3.19
UserFelt another product at home would do 2.70
UserSocial and psychological risk if a wrong choice were made 2.70
User, payerExpected price reduction or product modification in the near future 2.52
User, payerPerformance and financial risk if a wrong choice is made 2.65
BuyerFind shopping unpleasant 2.34
User, payerNeeded others’ consent 2.41
CUSTOMER ROLEREASON
MEAN IMPORTANCE
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Delay in Implementation (cont’d)Delay in Implementation (cont’d)
REASONS FOR DELAY CLOSURE
CUSTOMER ROLEREASON
MEAN IMPORTANCE
User, buyerFound the time 3.62
UserDecided on another alternative 3.84
PayerLower price became available 3.10
UserNeed had become passing 3.51
BuyerFound a good store 2.41
BuyerTired of shopping further 2.70
User, payerObtained the advice and consent I needed 2.14
PayerWas able to justify the expense 2.32
UserDue to good word-of-mouth 2.01
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Deviation From the Identified ChoiceDeviation From the Identified Choice
The preferred brand may be out of stock
New in-store information may reopen the evaluation process
Financing terms may render a purchase infeasible
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Step 5: Postpurchase ExperienceStep 5: Postpurchase Experience
Decision Confirmation
Experience Evaluation
Satisfaction/Dissatisfaction
Future Response: Exit, Voice, or Loyalty
Copyright © 1999 by Thomas Southwestern. All rights reserved.
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Customer Behavior: A Managerial Perspective
Measuring Satisfaction in Termsof ExpectationsMeasuring Satisfaction in Termsof Expectations
How did we do? How was our:
Fell Below Expectations
Met Expectations
Exceeded Expectations
Room appearance
Room cleanliness
Registration speed
Friendliness of staff
Room service promptness
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Complaining Behavior
Complaining Behavior
Determinants of ComplainingDeterminants of Complaining
• Performance expectation gap• Product/service importance• Performance expectation gap• Product/service importance
Dissatisfaction SalienceDissatisfaction Salience
• Aggressiveness• Self-confidence• Aggressiveness• Self-confidence
Personality TraitsPersonality Traits
• Failure controllable by the marketer• Marketer likely to repeat the failure• Redress is likely
• Failure controllable by the marketer• Marketer likely to repeat the failure• Redress is likely
Attribution to the MarketAttribution to the Market
Copyright © 1999 by Thomas Southwestern. All rights reserved.
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Customer Behavior: A Managerial Perspective
Individual Customer Decision Making and the Three Customer RolesIndividual Customer Decision Making and the Three Customer Roles
Problem recognition Awareness of better price value from competitors causes payer role problem recognition.
Buyer dissatisfaction with service, convenience and personalization values can cause problem recognition. New delivery channels serve as solution stimuli to cause problem recognition by buyers.
Users are the most frequent problem-recognizers.
INDIVIDUAL DECISION MAKER
Role convergence sometime causes sacrifice in weak user values
With someone else as payer, users tend to consumer more; also user evaluation is less stringent.
User in control of buying role as well; strong user values rule over payer/buyer values.
DECISION PROCESS
CONCEPTS BUYERPAYERUSER
Copyright © 1999 by Thomas Southwestern. All rights reserved.
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Customer Behavior: A Managerial Perspective
Individual Customer Decision Making and the Three Customer Roles (cont’d)Individual Customer Decision Making and the Three Customer Roles (cont’d)
Information search Inadequate buyer motivation to expend search efforts constrains user and payer desire for more information.
Payer role seeks information about competitors’ prices.
Information pertaining to user values is sought
Search determinants:
Perceived risk Buyers lean on trustworthy sources.
Payers willing to pay more to avoid user risks.
User-felt risk causes more information search.
CONCEPTS BUYERPAYERUSER
Involvement Involved buyers do extensive information search.
User involvement may demand sacrifice in buyer/payer values.
Familiarity Familiarity lulls buyers into less search effort.
User familiarity enables greater use of available information.
Time pressure Time pressure affects buyers the most who seek efficient exchanges.
Users seek time-saving features in products/ services.
Copyright © 1999 by Thomas Southwestern. All rights reserved.
CHAPTER 8CHAPTER 8PART 3
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Customer Behavior: A Managerial Perspective
Alternative evaluation For parity products, buyer values become important criteria.
For parity products (i.e., with user indifference), payers seek to maximize price value.
Users’ values most important evaluation criteria.
Decision models:
Compensatory Users participate actively.
Noncompensatory To minimize cognitive effort, buyers like to use noncompensatory model.
Payer value may be exercised through use of some noncompensatory model.
One or the other role may play a major role.
Functional/expressive product
For expressive products, users must participate in evaluation.
CONCEPTS BUYERPAYERUSER
Individual Customer Decision Making and the Three Customer Roles (cont’d)Individual Customer Decision Making and the Three Customer Roles (cont’d)
Copyright © 1999 by Thomas Southwestern. All rights reserved.
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Customer Behavior: A Managerial Perspective
Individual Customer Decision Making and the Three Customer Roles (cont’d)Individual Customer Decision Making and the Three Customer Roles (cont’d)
Purchase This stage is most relevant to the buyer role.
Lack of agreement on financing may hinder purchase.
Post-choice processes:
Buyer’s remorse/decision confirmation
Buyer role subject to remorse; seeks more favorable information to ward decision confirmation.
CONCEPTS BUYERPAYERUSER
Experience evaluation Product use experience by the user role.
Satisfaction Determined largely by satisfaction of user values.
Exit, voice, loyalty Loyalty simplifies buyer’s task.
User satisfaction leads to loyalty. Users spread word-of-mouth.
Complaint Buyer aggressiveness determines if complaint will be made.
User dissatisfaction motivates complaints.